Chiral 1-(o-chlorophenyl)-ethanols are key intermediates in the synthesis of chemotherapeutic substances. Enantioselective reduction of o-chloroacetophenone is a preferred method of production but well investigated chemo- and biocatalysts for this transformation are currently lacking. Based on the discovery that Candida tenuis xylose reductase converts o-chloroacetophenone with useful specificity (kcat/Km=340 M(-1) s(-1)) and perfect S-stereoselectivity, we developed whole-cell catalysts from Escherichia coli and Saccharomyces cerevisiae co-expressing recombinant reductase and a suitable system for recycling of NADH. E. coli surpassed S. cerevisiae sixfold concerning catalytic productivity (3 mmol/g dry cells/h) and total turnover number (1.5 mmol substrate/g dry cells). o-Chloroacetophenone was unexpectedly "toxic," and catalyst half-life times of only 20 min (E. coli) and 30 min (S. cerevisiae) in the presence of 100 mM substrate restricted the time of batch processing to maximally ∼5 h. Systematic reaction optimization was used to enhance the product yield (≤60%) of E. coli catalyzed conversion of 100 mM o-chloroacetophenone which was clearly limited by catalyst instability. Supplementation of external NAD+ (0.5 mM) to cells permeabilized with polymyxin B sulfate (0.14 mM) resulted in complete conversion providing 98 mM S-1-(o-chlorophenyl)-ethanol. The strategies considered for optimization of reduction rate should be generally useful, however, especially under process conditions that promote fast loss of catalyst activity.